Taxpayers Will Pay $19 Million for Florence Annexations

"Maybe it would be cheaper to just buy the land and turn it into a park", a comment heard more and more often when discussing the prospect of annexing more property into a city.

The City of Florence is considering requests by several developers to annex a total of 211.64 acres.  The justification is to address concerns about the availability of land for "growth". Opponents of the annexations point out that this is a $19.2 million decision.

In the past, the accepted thinking was that annexations would be a good thing: more people means more taxes collected,  more money in government coffers to provide needed services.  Most people might expect that the property taxes are set at a level that would ensure that developers are paying their fair share - that any increase in need for government services (roads, schools, water supply) would be offset by increased taxes.

Apparently, this isn't so, says Eben Fodor in his "Cost of Growth in Oregon: 1998", a statistical analysis of the cost of growth to communities.  Fodor’s analysis, which was accepted by the Governor's task force on the cost of growth, shows a net cost to existing residents of  $33,260 for every new home that is built in the community.  Florence’s year 2020 housing needs projections use a figure of 2.04 people per home, and 4.84 homes per acre.  Using those figures, the total number of
new homes that could be expected in the 211.64 acres would be 1,024.  The proposed zoning and development plans for these parcels, however, point to a lower density - just 782 more homes.  Under current city rates, each home could be expected to pay about $3,950 in systems enlargement fees, which would leave a net cost of $29,310 per home.  Based on Fodor’s statewide figures, the
total cost of increasing the size of the city by 211.64 acres - $22.9 million.

Adjusting the figures to more fully reflect a small community like Florence, population 7,263, changes Fodor’s analysis.

Most newcomers to Florence are retired.  About 10% of the proposed expansion is around a golf course.  This leads to a conclusion that some of the proposed development will be senior citizen oriented.  So there probably would be less impact on the schools - discounting the $11,809
allocated to school costs by 50% equals $5,904.

Sewer system costs are another matter here in Florence.  We’ve just built a new sewer plant designed to take care of 12,000 people.   The new plant was supposed to last until the year 2020, but recent population projections indicate the need to upgrade could occur before the year 2015
if the annexations are allowed.  Put another way, the proposed annexations could cut five years off the life of the sewage treatment plant.  Some of that cost will be paid by newcomers through systems
enlargement fees.  Unfortunately, those fees seldom, if ever, cover the whole cost of the enlargement necessitated by new growth.  No discount to the $1,660 allotted to sewer system costs.

Fodor estimates the cost of building new roads to serve the new areas - $4,430. 158 of the  acres would be served by small, two-lane Munsel Lake Road, presently owned and maintained by the
County.  If that area of Florence is brought into the city, it will be the city’s responsibility to upgrade the road to accommodate the increase in growth.  81.1 acres of the annexation will also require a new road to access.   More people will likely require wider roads, new curbs, drainage, lighting, signage and traffic signals inside the city.  No discount there.

Fodor estimates the cost to provide water to each new home is 2,729.  Right now, Florence’s water production meets city needs during the winter.  About one-third of its water is purchased from Heceta Water District during the summer.  The City is planning to build a new water well system, which is projected to cost $12 million over the next 20 years - in order to accommodate the new growth.  The City is negotiating with a Heceta Water District to supply water to the to-be-annexed properties, but even that stop-gap solution brings its own problems.  The water district has recently
been restricted to one million gallons per day by Lane County. The water district’s ability to provide water depends on obtaining special permission from the county in order to increase its water
production.  Other private influences may also interfere with the water district’s ability to produce more water.  If the water district is unable to increase its production, the addition of the new
parcels will force the city to begin building the new $12 million water system about five years earlier than planned. No discount there.

Parks  - $2,915 per house.  Our parks are projected to be insufficient for the size of our community by the year 2020.  The argument could be made that retired folks don’t use the parks all that much, and maybe we’ll be able to get by with the existing parks we have - especially considering there are so many state and federal forest lands in the area.  Deduct that cost from the estimate.

Stormwater Drainage - $483.  Most of the land proposed for inclusion is in the northeast area of Florence - an area that is infamous for its stormwater flooding problems. The city is working on a
city-wide stormwater management system.  The solution is likely to be a big item in the city’s budget.  Development of these lands would in fact be exacerbating the problem by encouraging development in historically recognized wetlands and stormwater retention areas. $483 seems extremely  reasonable, some might even call it  charitable under the circumstances.

Expanded library and fire protection facilities - $441.  The library is in pretty good shape right now, but again, the increased retirement population can be expected to put more of a strain on services than do working families, so that seems to be a legitimate cost.

Fire protection services - $298 - have been delegated to the rural fire department, but an increase in the city’s share of the service area will no doubt be reflected in an increase in service rates to
the City.  No discounts there.

Last, but not least, electric power and distribution costs - $8,494.  Since the local public utility district takes care of that, it would be very easy to simply ignore the costs.  But each rate payer
living in the city will be paying their share of the net costs associated with the PUD’s additional equipment needed to serve more people.  The houses to be built on the 211 acres will require new
power facilities.  No discount.

That leaves a locally-adjusted cost to the taxpayers of $24,439 per house. Net cost to existing taxpayers of annexing 211 acres to the city, after deducting the City's systems development charges:
$19,284,298.

Will all those new homeowners be paying for these costs with their city property taxes?  Property taxes only pay for “operation and maintenance” of existing government services, including increased staffing needed, etc.  Property taxes will not pay the $19.2 million cost to the residents of Florence for  “capital” costs - like adding another wing to the library, buying another fire truck, or adding another well to produce drinking water.

Bottom line - The City needs to check out their own bottom line before they approve annexation.